Contracting with the Feds

February 3rd, 2014 / By Deborah J. Merritt

Today’s National Law Journal has an interesting story about the federal government’s cuts to contracts with private lawyers. The story interested me for three reasons.

Who Knew?

First, I never realized that the federal government spent so much to purchase private legal services. In 2013, the feds spent more than half a billion dollars on outside legal services, with the money flowing to more than 1900 private contractors. That’s a small fraction of the total market for legal services, but it’s more than pocket change. I hadn’t realized that, in addition to hiring its own lawyers, the federal government spends significant money to hire private lawyers.

Shrinking Pie

Unfortunately, the feds–like so many other legal clients–are spending less for their outside legal services. In 2009, the federal government disbursed more than $682 million for legal services. The total climbed in 2010 to more than $714 million, but has fallen steadily since that peak. For 2013, the total was just over $542 million–a 24% decline. This is the second point that struck me: our graduates face, not only decreased hiring by federal agencies, but less outside spending by those agencies. This is a federal “counter-stimulus” to the legal market.

Lawyers Make Up a Small Part of Legal Services

Perhaps most daunting, government dollars for “legal services” go primarily to contractors that provide law-related services, not to law firms or individual lawyers. Of the $542 million that the government spent in 2013, only $54 million went to law firms or solo practitioners. More than 90% of the money spent on outside legal services went to “legal service” providers that assisted with asset forfeiture, e-discovery, and other law-related tasks.

Those companies undoubtedly employ some lawyers. The composition of services purchased by the federal government, however, is yet another reminder that a growing number of non-lawyers provide law-related services. I have no problem with that shift; three years of formal legal education are not necessary to perform many tasks related to interpretation, application, and enforcement of the law. The government’s contracting figures, however, are yet another reminder of that reality. This is the third, and perhaps most important, lesson we can draw from the National Law Journal‘s report.